ANIL DATTARAM PITALE ,MUMBAI V. INCOME TAX OFFICER, DELHI

ITA 465/MUM/2025

AI Insights

The case revolves around an appeal by Anil Dattaram Pitale against the order of the Ld CIT(A), which confirmed an addition of Rs.19,74,660 as income under section 56(2)(x) of the Income Tax Act. This addition was made following the redevelopment of a housing society where the assessee surrendered an old flat and received a new one. The Tribunal examined whether the addition was correctly made under section 56(2)(x), which pertains to the taxation of property received without adequate consideration. The Tribunal concluded that the transaction did not fit this provision and directed the deletion of the addition, suggesting that the transaction might be more appropriately assessed under capital gains provisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32227 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN UNAVEKAR
• Assessee Lawyers: K. SHIVARAM AW
• Keywords: Set aside; Capital Gains

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “SMC” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA No. 465/Mum/2025 Assessment Year : 2018-19 Anil Dattaram Pitale, B-2, 702, Sundervan, Lokhandwala Complex, Andheri (West) Mumbai-400058. PAN :AENPP4732M vs. Income Tax Officer-16(2)(1), Aayakar Bhavan, Mumbai-400 020. (Appellant) (Respondent) Assessee by : Dr. K. Shivaram a/w. Mr. Shashi Bekal Revenue by : Shri Kiran Unavekar, Sr.DR Date of Hearing : 13-03-2025 Date of Pronouncement : 17-03-2025 O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dated 30-09-2024 passed by the Ld CIT(A), NFAC, Delhi and it relates to the Assessment Year (AY.) 2018-19. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition of Rs.19,74,660/- made by the AO u/s 56(2)(x) of the Act. 2. The appeal is barred by limitation by 54 days. The assessee has filed an affidavit explaining the delay. We heard the parties on this preliminary issue. Having regard to the submissions made by the assessee in the affidavit, we are of the view that there was sufficient 2 ITA No. 465/Mum/2025 cause in filing this appeal belatedly. Accordingly, we condone the delay and admit the appeal for hearing. 3. The facts relating to the above said issue are discussed in brief. The assessee had purchased a flat in the financial year 1997-98 in Mahavir Nagar Tristar Co-op Hsg Society bearing no.C-5/28. The society underwent redevelopment as per the agreement entered with the developer. As per the terms and conditions of the agreement, the assessee got a new flat no.B-1102, vide registered agreement dated 26th December, 2017 in lieu of the old flat surrendered by him. The stamp duty value of new flat was Rs.25,17,700/-. The indexed cost of the old flat was Rs.5,43,040/-. Accordingly, the AO assessed the difference between the above said values amounting to Rs.19,74,660/- as income of the assessee u/s 56(2)(x) of the Act. The LdCIT(A) confirmed the same. 4. We heard the parties and perused the record. The facts discussed above would show that the assessee got a new flat in the redeveloped property in lieu of old flat. Hence, it is a case of extinguishment of old flat and in lieu thereof, the assessee has got new flat as per the agreement entered with the developer for redevelopment of the society. Thus it is not a case of receipt of immovable property for inadequate consideration that would fall within the purview of the provisions of sec.56(2)(x). Accordingly, we are of the view that the provisions of sec.56(2)(x) will not be applicable to the facts of the present case. 5. At the most, this transaction may attract the provisions relating to capital gains, in which case, the assessee should be entitled for deduction of cost of new flat u/s 54 of the Act. In that case, there will be no tax liability upon the assessee on account of these transactions. 6. Accordingly, we are of the view that the tax authorities are not correct in law in assessing the impugned transaction u/s 56(2)(x) of the 3 ITA No. 465/Mum/2025 Act. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the addition made by him u/s 56(2)(x) of the Act. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 17-03-2025 Sd/- Sd/- [SANDEEP GOSAIN] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 17-03-2025 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "